Temporary Job Assignment...what's deductible?

[LCP]

Employee takes a job in another location for six months....... by definition "temporary" correct?

So what's deductible while living there? Travel to the location I understand but how about the cost of an apartment for six months? ..... a per diem for meals ?? ...... any mileage while living there (seems like that would be commuting still)???

[ATSMAN]

The IRS states that if you expect your employment away from home in a single location to last, and it does last, for 1 year or less, it is temporary unless facts and circumstances indicate otherwise. If you expect it to last for more than 1 year, it is indefinite. However, if you expect your employment away from home to last for 1 year or less, but at some later date you expect it to last longer than 1 year, it is temporary (in the absence of facts and circumstances indicating otherwise) until your expectation changes. Starting with the date your expectation changes, travel expenses will no longer be deductible. (IRS Publication 54, page 12). What determines a temporary versus an indefinite assignment is the intent of the taxpayer. If assignment contracts can be made to last a year or less, this makes it much easier to document and support the position that your job was temporary in the uncommon event of an audit (see below).

Temporary living expenses are treated as unreimbursed employee business expenses on your tax return. You are more at risk for being audited on the temporary living expense deduction if your expenses are high relative to income.

Temporary living expenses include hotel lodging (or apartment rent for longer stays), meals, and local transportation. Meals may be estimated using federal per diem rates. On the tax return, temporary living expenses are deducted as unreimbursed employee business expenses.

[Kram BergGold]

What you need to know

1. your client must have duplicate living expenses. This means a home at his or her tax home. It can be sublet but it can't be a parent's house.

2. Moving personal stuff does not count buy the first travel to and last travel from the temporary location counts.

3. Daily commute to work is deductible.

4. Other expenses as detailed in previous post count.

5. If the client travels back to tax home you claim the lesser of the cost to travel or what it would have cost to stay at the temporary site. This means if 1/30 of rent and utilities and food per diem is more than the amount spent to travel home you deduct the travel cost and reduce the others accordingly.

[LCP]

Questions in caps imbedded in the quote:

1. Your client must have duplicate living expenses. This means a home at his or her tax home. It can be sublet but it can't be a parent's house. To qualify in the first place or to deduct rent?

2. Moving personal stuff does not count buy the first travel to and last travel from the temporary location counts.

3. Daily commute to work is deductible.

4. Other expenses as detailed in previous post count. Like m&i per diem for every day of the period including saturdays and sundays??

5. If the client travels back to tax home you claim the lesser of the cost to travel or what it would have cost to stay at the temporary site. This means if 1/30 of rent and utilities and food per diem is more than the amount spent to travel home you deduct the travel cost and reduce the others accordingly.

[LCP]

Looks like that didn't work.....the questions are:

1. Is a duplicate living expense required to qualify for any deductions in the first place or just to deduct rent?

2 Are per diems for M&I allowed for every day of the temporary living period including saturdays and sundays??

[Kram BergGold]

Answers

Duplicate living expenses are the start point. If the worker has been living in his parents house or stopped renting his apartment when he left then you can't deduct temporary living expenses. If he rents or owns his home and sublets his space while away this qualifies for duplicate living expenses.
Per diems are taken for 7 days a week. Again as long as he is at the temporary site.

[LCP]

Duplicate living expenses are the start point. If the worker has been living in his parents house or stopped renting his apartment when he left then you can't deduct temporary living expenses. If he rents or owns his home and sublets his space while away this qualifies for duplicate living expenses.
Per diems are taken for 7 days a week. Again as long as he is at the temporary site.

Darn. I researched this a bit at various sites incl TheTaxBook........ none of them indicated that duplicate living expenses were a starting point although I do see that as being an issue in the midst of the discussion. Seems like a logical presentation of the subject would list it first.

That makes sense........ as far as deducting rent goes. However, how can you ever have a duplicate meal or a duplicate commute? You can't and it would seem like they shouldn't be deductible at all....or else a duplicate living situation shouldn't be required.

[Kram BergGold]

Duplicate Living Expense

Duplicate Living Expense means that the traveler, before he left his tax home, was paying expenses for a home in which he lived and he continues to own or rent that home. Like I said this eliminates a deduction for a person living rent free in a parent's or significant other's home or someone who gives up his lease or sells his house before leaving for the temporary job. He may rent or sublet this home while he is away. That is it. He just has to maintain his tax home for a place in which he has some financial responsibility towards.

[TaxGuyBill]

Duplicate Living Expense means that the traveler, before he left his tax home, was paying expenses for a home in which he lived and he continues to own or rent that home. Like I said this eliminates a deduction for a person living rent free in a parent's or significant other's home or someone who gives up his lease or sells his house before leaving for the temporary job. He may rent or sublet this home while he is away. That is it. He just has to maintain his tax home for a place in which he has some financial responsibility towards.

Do you have any citations based on your thoughts?

It depends in the specific circumstances, but that doesn't make sense to me. If an employee is working for the same employer and temporarily works in another location with the idea that he will come back to the original location for the same employer, his “tax home” continues to be at the original place. He can deduct ALL expenses, even if they are not duplicated.

I like how Publication 463 phrases it: “Generally, your tax home is your regular place of business … If you have more than one regular place of business, your tax home is your main place of business”. In my described scenario, I would consider the original place as his “main place of business”.

http://www.irs.gov/publications/p463/ch01.html#en_US_2012_publink100033754

If the situation is that the original place is NOT his “main place of business” (such as different employers), then duplicate living expenses is ONE of the factors, and Kram is probably right.

And just to clarify, if the employee's "tax home" is determined to be at the original location, then ALL expenses at the temporary location are deductible. If the "tax home" is NOT at original location, then NONE of the expenses should be deductible. It's ALL or NOTHING.

Again, if you have any citations or basis for your thoughts, I would greatly appreciate it. This is a tricky area, and I may be wrong.

[MAMalody]

I agree with TaxGuyBill. I would like so see the duplicate exp cite also.

[Kram BergGold]

Court Cases

I have seen court cases that upheld the IRS position to disallow 2016 expenses because the taxpayer was not paying any home expenses at his tax home. If I can find them I will get back to you on this.

[Kram BergGold]

Found One

Sometime prior to 2002 there is a case involving Thomas Crain and his wife.
They lived in with his parents in Hot Springs,AR and paid no rent for 5 years. He worked as an electrician. He took a 10 month job in Baton Rouge, La. The Court denied his deduction saying " The purpose of allowing the deduction of living expenses while a taxpayer is away from home is to mitigate the burden of the taxpayer who, because of exigencies of his trade or business. must maintain two places of abode and thereby incur additional and duplicate living expenses.... "
"There is no evidence in the record which supports petitioners' contention that they have inured the requisite increased or duplicate living expenses by maintaining the house in Hot Springs, AR."
These people also registered their car and registered to vote in LA. This contributed to the finding against them.
It seems that the concept of duplicate expense was the original intent of the law. It may be something that is not too often looked at these days but it is there anytime the IRS or Court wants to use it to deny a deduction.
I found this information in The 2002 Tax and Financial Guide for College Teachers.

[dan doshan]

I believe what we're getting at is that you probably can't have a temporary job unless you have a regular job location or main place of business. If you do not have a regular job location then your tax home may be the place where you live. One of the requirements for considering whether or not your tax home may be where you regularly live is .... You have living expenses at your main home that you duplicate because your business requires you be away from that home.

If you do not have a regular place of business or you do not meet the requirements of assuming your personal residence as being your tax home ... then you most likely would not have a temporary job assignment.

There are numerous examples and cases where an employee had temporary jobs but no travel expenses were allowed because he could not establish a tax home. For example, a taxpayer that lives with his parents, or some guy that lives with his girlfriend or whatever but pays little or no rent or other recurring expenses, among other criteria, would likely not qualify for deducting travel expenses for some temporary job he took out of the area. His tax home would basically move with him.

[LCP]

Sometime prior to 2002 there is a case involving Thomas Crain and his wife.
They lived in with his parents in Hot Springs,AR and paid no rent for 5 years. He worked as an electrician. He took a 10 month job in Baton Rouge, La. The Court denied his deduction saying " The purpose of allowing the deduction of living expenses while a taxpayer is away from home is to mitigate the burden of the taxpayer who, because of exigencies of his trade or business. must maintain two places of abode and thereby incur additional and duplicate living expenses.... "
"There is no evidence in the record which supports petitioners' contention that they have inured the requisite increased or duplicate living expenses by maintaining the house in Hot Springs, AR."
These people also registered their car and registered to vote in LA. This contributed to the finding against them.
It seems that the concept of duplicate expense was the original intent of the law. It may be something that is not too often looked at these days but it is there anytime the IRS or Court wants to use it to deny a deduction.
I found this information in The 2002 Tax and Financial Guide for College Teachers.

Thanks for the info. I trust that my case will never get to court. In fact I know it won't.